The X’s & O’s
When you start looking for someone to help you handle your finances, you’ll often see that many financial professionals refer to themself as a “financial advisor.” Over the years, it has become a common title to see and it can be difficult to recognize the differences between each professional that uses this umbrella term. Brent, Matthew, and Joshua will run down a list of the different financial professionals you may come across and talk about what their primary focus is when they work with you.
Brent Pasqua, Matthew Theal and Joshua Winterswyk
Brent Pasqua: Welcome to the Retirement Plan Playbook. I think we have a great topic today. It’s a topic that really always gets me fired up. I’m excited to share it with the listeners. Today, we’re going to talk about the different types of advisors that are out there.
Brent Pasqua: I’m Brent Pasqua, host of the Retirement Plan Playbook, founder of RPA Wealth Management. Here with Matthew Thiel, certified financial planner at RPA Wealth Management. Joshua Winterswyk, certified financial planner at RPA Wealth Management. How are you doing guys?
Matthew Thiel: I’m doing great, Brent. Excited for today’s show.
Joshua Winterswyk: Me too. Doing well.
Brent Pasqua: So, as we kind of kick this thing off, seen a lot of news recently about COVID outbreaks in the NFL. Think we’re on week four or five, coming up in the NFL. How do you think this thing shakes out?
Matthew Thiel: Yeah. It’s not looking positive, but I mean the other sports have been able to bounce back. The MLS, which Josh and I follow very closely, has bounced back. European soccer’s bounced back after positive tests. MLB was able to bounce back after what looked like… I mean, there was a weekend in MLB, I think it was a Saturday, where we’re like, “They’re probably not going to play games anymore,” but they’ve figured it out. NFL will figure it out. They really messed up their schedule though. There’s no reason to be sending West coast teams to the East coast and vice versa. That was a big mistake on their end, but they’ll get it sorted.
Brent Pasqua: Now, are they linking that part to the travel, or has it seemed like a lot of this has happened more in-house and has been missed protocols by certain teams?
Matthew Thiel: I haven’t followed it closely enough.
Joshua Winterswyk: No, me neither. I’m just happy my favorite team hasn’t had a breakout yet. And they’re in Florida, so that’s kind of surprising. But I’m also kind of surprised that it took… what is it? We’re going into week five of the NFL season. And now, they’re running into some bigger issues. I would’ve kind of guessed that because they were traveling back and forth that maybe this would’ve happened even a little bit sooner. But I have to agree with you, Matt. I think they will figure it out, but there’s going to be some adjustments definitely to the schedule and to the traditional records, record-keeping, of this league.
Brent Pasqua: Yeah. And I think it’s interesting. You knew there was going to be hiccups. And I thought originally the plan was the person who gets sick just kind of gets put off to the side for a few weeks and the team carries on. But it seems like the NFL is getting much more sensitive with it and they’re being more careful than I thought actually they would be.
Matthew Thiel: Yeah, they are. Absolutely. I kind of thought they’d throw the players off the field, put 10 new ones on.
Brent Pasqua: Yeah, that’s what I thought. All right. Well, let’s get into some of the hot-take headlines. Tesla is building a Gigafactory near Austin, Texas. Did I say that correct, Matt?
Matthew Thiel: Yep. Sounds good.
Brent Pasqua: All right. The area’s about 2,000 acres. He’s calling it the ecological paradise. They’re going to have a bike trail, hiking, a lot of outdoor activities. But the facility will build the cybertruck Semi, the Model 3 and the Model Y. They’re fabricating a lot of the building in other locations and then bringing it over. It’s like I think on record time for being built. But it’s going to help create millions of dollars of tax breaks. Matt, what’s your thoughts?
Matthew Thiel: Just another company leaving California. Seems to be the trend these days. California is not a business-friendly state. And it’s not a tax-friendly state for individuals. And people are leaving. And it’s sad to see because it’s a beautiful state. But it’s a smart move for Tesla, Elon Musk and their employees. Good for them.
Brent Pasqua: And my understanding, Josh, is that he’s going to maintain his facility still here in California, but it sounds like this is just one step of having his foot out the door into another state. Is that correct?
Joshua Winterswyk: Yeah. And he had talked about, even when the pandemic first started, about moving out of California because of the lockdowns and not deeming his manufacturing essential. And that was kind of the trigger event that probably got his mind going of all of the other reasons Matt talked about people in businesses moving out of California. So, I just think it’s right in line with I think what a lot of people are thinking, what a lot of businesses are debating because California, again, just isn’t friendly to business and individuals, especially on the tax side. So, he’s going to save a lot of money. And his new facility sounds pretty awesome.
Brent Pasqua: Yeah, it does. I mean, he’s just so innovative and he comes up with such creative ideas. It’s not shocking that he would put this building next to Austin, and I’m sure having all those employees. And Texas has a really good workforce, so I’m sure it’s not going to be hard filling that building with workers.
Brent Pasqua: Another topic and headline for today is talking about SPACs. SPAC is a special purpose acquisition company, also known as a blank-check company. A SPAC has no day-to-day operations, but plans to raise money for an initial public offering so it can start to make acquisitions. It’s really a corporate shell usually sponsored by a well-known investor that goes public by issuing shares and raising money from investors with the plan to buy a company. Usually, they’ll buy either a startup company or a distressed company. But we’re seeing this happen a lot more this year.
Brent Pasqua: Last year, in 2019, SPACs raised about $13 billion. At this point in the year, they’ve already raised $12 billion. And they’ve been in the news of most recent because of Nikola. Nikola became public from a SPAC, and probably wouldn’t have passed through the IPO process had there been a little bit more due diligence. The due diligence process is different between SPACs and IPOs. And so, this has really brought that out. But Nikola probably wouldn’t have gone through the IPO process had they been actually found out that they were just basically drawing trucks and not actually making vehicles. What’s your thought, Josh?
Joshua Winterswyk: Really interesting. I think that this type of fund pulling through the stock market volatility, I’m not surprised that it’s gaining in just popularity and it’s growing. Think the latest number that I saw is that SPACs actually have grown to 40 billion of what they’ve earned now through 2020. And it’s because it’s easier than going through the IPO process. And, like you said, Brett, Nikola went through the SPAC process, and it kind of overlooked a lot of things. But just the ease of actually going through that process. And companies have a little bit more negotiation tactics when they’re being purchased by a SPAC. I can see why they’re gaining in popularity through this time.
Brent Pasqua: Now, you can correct me if I’m wrong, Matt, and maybe correct me on what the process is. But from my understanding of SPAC, let’s say you’re an investor and you have $100,000. You can put your $100,000 into this fund. This fund, which let’s call it the SPAC, has a purpose of buying another company. But they’re, let’s say, eyeballing 10 other companies. And once the SPAC raises enough money, they decide on what company that they’re going to go after and buy. Is that kind of how, from the investor’s standpoint, the process works?
Matthew Thiel: Yeah. Basically. You’re buying a company, call it SPAC A. And once SPAC A gets enough money, then they go purchase a real company.
Brent Pasqua: And that real company isn’t determined when you’re investing that money, from my understanding.
Matthew Thiel: Correct. That’s correct. You don’t find out until after you’ve given them your money. But a neat thing is if you don’t like the company they’ve chosen or invested in, you could request your money back.
Brent Pasqua: Yeah. And I think that’s pretty neat. And it’s been in the news so much more. Is Nikola part of the reason why also your thought is that it’s been in the news so much more lately?
Matthew Thiel: Potentially. But I think it’s just been super successful. There’s been a lot of companies who have gone public this way. It’s the backdoor way to do it. And they’ve been big winners on the stock exchange. I’ll name two. Virgin Galactic that makes the space ships. They were kind of the first prominent company to go public this way. And then another one that I know, I believe all three of us own shares, and correct me if I’m wrong, but DraftKings, that we participated in that’s now public, was a SPAC.
Brent Pasqua: 47 acquisitions this year. Just seems like with the M&A market and not as many mergers and acquisitions going on or IPOs, it seems like a lot to me. I don’t know what your guys’ thoughts are.
Matthew Thiel: Yeah. And it seems like because a SPAC can buy a distressed company, and with companies that are having challenges under the pandemic, it seems like an opportune time for SPACs to be able to go in there and buy a distressed company, inject some capital and keep the company afloat during these more difficult times.
Brent Pasqua: All right. Any more thoughts on SPACs?
Matthew Thiel: Just be careful. Do your research before you invest in one of these. But I do think it’s a big one for the individual investor.
Brent Pasqua: Great insight. That’s important for investors to know. All right, let’s get into the next topic. Let’s get to the retirement planning corner. Today, we’re going to talk about the different types of advisors that are out there. There’s lots of different types of advisors that will call themselves financial advisors. And they could be either registered investment advisors, broker-dealers, just insurance agents or a hybrid of some of them. Today, let’s kind of break down what some of those are, the differences between them, and then why some of them are hidden under that financial advisor kind of title when they’re not really a financial advisor.
Brent Pasqua: I think one of the most critical decisions a client can make when hiring an advisor is to actually know what kind of advisor they’re hiring. Not all advisors are the same. They’re all not designated and structured to do the same things. And so, it’s important that we know kind of the legal differences between all of them. The first one that’s talked about is a registered investment advisor. And Matt, tell us what a registered investment advisor is.
Matthew Thiel: Yeah. A registered investment advisor or aka a RIA, which is what we are here at RPA Wealth, full disclosure. So, RIA firms, they register with either the state they do business in or the SEC. You have to be a certain size to register with the SEC. So, if you’re going with a small RIA, then they would be state-registered. We’re SEC-registered. And the simple legal definition is an RIA has a fiduciary obligation to put you, the client, interests first. So, that’s what an RIA does. That’s what they mean.
Matthew Thiel: Typically, a lot of RIAs are going to get paid by charging a management fee. So, we call this the AUM fee. They manage your money. They make 1%, 2% or less. It just depends on their agreements. And that’s how they get paid. That said, you could kind of be a hybrid and make some commissions, but for the majority, RIAs are what we call fee-based. We’re going to touch on fee-only later in the show, so I won’t really go there yet.
Matthew Thiel: One big benefit to RIAs is they are usually boutique smaller firms. So, they’re not going to be under some big corporate structure, where they’re trying to make quarterly earnings or the bosses are telling the investment advisors what to do and what to sell.
Brent Pasqua: Those are all really great and important points. Let’s also talk about what a broker-dealer is. Josh, tell us a little about what a broker-dealer is.
Joshua Winterswyk: To me, the easiest way to understand broker-dealer is your traditional Wall Street organization and your traditional stockbroker. So, these professionals, a lot of them go by financial advisors. And they have looser regulations than RIAs that we just talked about. And they can actually charge you commissions for selling financial products.
Joshua Winterswyk: A lot of times you find these brokers or broker-dealers that, again, the big Morgan Stanley. The banks is a lot of times where you get connected with these types of financial advisors. So, more of that traditional advisor kind of platform.
Joshua Winterswyk: Again, one of the biggest differences is that they can sell you products that are charged a commission, and they’re not giving you necessarily fiduciary advice. Their advice can be just suitable for you, not necessarily fiduciary. That’s something that you really have to keep in mind of not only what type of advice you’re paying for it and how you’re getting paid, but the broker-dealers are those traditional stockbrokers that can sell you something that isn’t necessarily fiduciary to your need. And a lot of times, they’re connected to a bigger organization, not like the smaller RIAs that Matt just talked about.
Brent Pasqua: So, a broker-dealer could have proprietary products that they’re selling and they’re getting commissions on in multiple ways. Is that correct?
Joshua Winterswyk: 100%.
Brent Pasqua: It seems like there could be a big conflict of interest in the broker-dealer world. Would you assume that that would be true too?
Joshua Winterswyk: Yeah, absolutely. I worked at Citigroup for the beginning of my career and after college. And a lot of the same products were being sold. A lot of the same advice was being sold. And it’s very high quantity, not necessarily high on the quality of the strategies or the investments. So, again, it’s just higher transactions. They have so many people coming through the door. Everything’s kind of in this ready-to-go box for you as soon as you walk in
Brent Pasqua: And is there grids or higher compensation for these types of advisors to sell more of their products or specific product?
Joshua Winterswyk: Oh, 100%. I mean, it was even to the point where you can get an email of what products are going to pay you a higher commission or going to get you to your next incentive goal, which could be a vacation or a higher percentage of payout for the amount you’re selling. So, it’s very, very driven by the compensation of what I’m selling, not necessarily the right product. And that’s just kind of the environment that I personally saw and that we’ve researched with the broker-dealers.
Brent Pasqua: Now, considering that you know the registered investment advisor side and the broker-dealer side, would you ever even consider being a broker-dealer, considering what you know about that?
Joshua Winterswyk: No. And the reason why is we’ve made that oath. But once I’ve worked in both industries now, I just don’t see how you can give truly fiduciary advice and still be selling products that have a commission or that have a higher pay scale for them. There’s just too much conflict of interest there. So, I just would never go back to that route because I just didn’t see it benefiting the client. I mean, ultimately, you want to work with someone that is fiduciary, that has your best interest at heart, not necessarily the interest of their own pocket book, or the interest of just the broker-dealer that they’re working for, that big Wall Street organization that they’re working for. So, no, I would never go back to that side of the business.
Brent Pasqua: Yeah. And I think if people are thinking about it, I mean, if you have a job where your incentive goal and you get paid more money by selling more of something, then generally, it would seem that a lot of people would try to hit their goals because people are goal-oriented. And by hitting their goals, that means that they’re selling more things that they’re being told to sell to clients that may not need it in the broker-dealer world, which seems like the outcome for the client wouldn’t be as good.
Joshua Winterswyk: Sure. And just to even piggyback on that, leadership’s telling you to sell those certain things too because probably their compensation’s tied to that as well. So, everyone has to benefit. So, even if you’re not the one that’s motivated by the extra incentive or the extra bonus, but your manager or your leaders or your team leads are all saying, “Well, you should probably still sell this stuff because then we’re all getting paid, even though you might not be the one that’s worried about the extra incentive.” Just kind of bad culture.
Brent Pasqua: Very true, very true. Great point. The next one that we want to talk about is insurance agents. And insurance agents will generally find themself considering themselves as financial advisors. Matt, tell us a little bit more about what an insurance agent can do, what they don’t do and why they call themself an advisor.
Matthew Thiel: Yeah. Kind of similar to broker-dealers. They call themselves financial advisors, where they really aren’t. They’re really I guess, insurance advisors. So, on the insurance side, they could either be captive, where that means they work at one company, or you could be independent where you could work with multiple different insurance carriers.
Matthew Thiel: But insurance salesmen make money when they sell you a product. They make commission. They don’t get paid any way else. You’ll come across an insurance salesman typically at a bank or State Farm. Is it Northwestern Mutual, is another big one that acts like they have advisors, but it’s really just a bunch of people lining up to sell you insurance?
Joshua Winterswyk: I think they say like, “Every financial plan has to have a life insurance at its core.” They start with the life insurance.
Matthew Thiel: Yeah. That’s just an insurance agent selling you financial products. So, what are the insurance products you’re going to run into? You’re going to see annuities. You’re going to see life insurance. Variable universal life insurance is real popular with them. And then variable annuities. All of these are high-fee, high-commission. Just like Josh and Brent were talking about, it’s about those grids. It’s about making more money and hitting your bonuses. I don’t want to use the word scummy, but it’s not where I’d go for my financial advisory or even for my insurance advice.
Brent Pasqua: Right. And it’s a conflict of interest because these people are being compensated based on them selling products that pay out a commission. And all the different products have different commissions. And so, they’re starting to think about their pocket of, “Hey, if I sell XYZ, then I’m going to make this amount of money,” which can become I think very difficult and become a very big conflict of interest.
Brent Pasqua: And if you notice, a lot of the commercials that you see on TV aren’t about registered investment advisors and doing the right thing; it’s about insurance companies promoting their types of products. And yes, they have a lot of that sensitive type commercial marketing. But the reason they’re on those big-time spots on TV is because they’re the ones that make all the money. There is so much compensation surrounded by insurance products. It’s just not a little bit. And the more you put into insurance products, the more the compensation is. You start dumping 100, 200, $500 million in annuity. Guess what? That compensation is life-changing, significant.
Brent Pasqua: So, if people are selling you these products, I think it’s something that you need to be aware of and understand exactly how those work and if they’re in your best interest. Still, to this day, I’ve been in the business for 16 years. Started on the insurance side. I still can’t take a life insurance illustration and fully, 100% understand what it all means because they are so confusing. Would you agree with that, Josh?
Joshua Winterswyk: Yeah, yeah. And it’s funny because every illustration has some sort of tweak to it. So, they’re never uniform. They try to be, but the way they word this type of illustration is different from the next one. I totally agree with you. So hard to understand. So, for a consumer trying to understand it, good luck.
Brent Pasqua: Yeah. And you look at an annuity contract, you have a 60-page book that goes into legal restrictions around the annuity. I mean, to try to think that an investor, somebody putting their money into it, is going to trust that the insurance agent really knows what they’re doing with the annuity, that’s probably more rare. When we talk about designations, we’ll talk a little bit more about what you should be looking for, but that’s what an insurance agent does. They sell insurance products. Any other thoughts, Matt, as you kind of started a little bit on insurance agents?
Matthew Thiel: No, yeah, I mean, I think it’ll be fun and it’ll give a visual to people who have insurance agents. I mean, on the commission side, Brent, you’re put some big numbers out there, like, say, a million dollars. Someone does a million-dollar annuity. I mean, on the commission side, we’re probably talking new backyard, new pool money, right?
Brent Pasqua: Right.
Matthew Thiel: Paid for with cash.
Brent Pasqua: Yeah. The average commission annuity I would think is fair to say somewhere around 6 to 8%. Most insurance agents aren’t trying to sell a 5-year annuity that only pays 2%. They’re going after those 10 years with bonuses. That’s the ones that pay the bigger commissions.
Matthew Thiel: What? 80 grand?
Brent Pasqua: Yeah. And beware, that’s what pays for those seminar dinners that a lot of people get marketing towards. All right. The next one is a hybrid advisor. Josh, kind of connect the dots on what a hybrid advisor would be.
Joshua Winterswyk: Yeah. So, just really combining what we just talked about, any of the combination of RIA, broker-dealers and insurance agents. So, when an advisor is a hybrid advisor, they could be charging you both fees and commissions. So, your money management and your investment portfolio could be charged a fee, and that’s part of an RIA. And then they can have a separate entity or company or have a broker-dealer that they charge commission products as well.
Joshua Winterswyk: And so, one of the things that pops into my mind when I think of hybrid advisors and how to just know if they are or not, just ask them how they get paid. And be very detailed with asking what their answer is because that’ll kind of lead you to what type of advisor it is. But a hybrid advisor’s basically just a combination of the three other advisors that we talked about.
Joshua Winterswyk: And typically, these are the insurance companies. These are the American Funds, Edward Jones. The big banks can do this as well. So, you walk into Citibank, Chase, Wells Fargo, they’re able to charge you a commission for an insurance product, but then also charge you a fee for your portfolio management. So, these are, again, a combination of different types of compensation, which makes, I know, as the consumer, even more confusing.
Brent Pasqua: Would a hybrid advisor be considered a fiduciary, or would they be held to suitable standards?
Joshua Winterswyk: Just depends on what they’re selling. So, they could put on the hat and take off the hat as many times as they want, unfortunately.
Brent Pasqua: So, I guess in more simple terms so that the listener knows, you could be having a conversation with your advisor and, without him knowing, he’s really putting on his suitability hat versus his fiduciary hat. He could be mid-sentence and switching hats the entire time. So, you really don’t know if you’re getting fiduciary advice or suitable advice because he could be using both and having both those conversations without you even knowing.
Joshua Winterswyk: Yep, absolutely.
Brent Pasqua: And this sense of the type of advisors they are, I mean, do you feel that a client should know exactly how much they’re paying in fees?
Joshua Winterswyk: Absolutely, yeah. And there shouldn’t be any sort of confusion. It should be very easy to understand. So, as a consumer, if it’s not easy to understand what you’re paying or you can’t get that answer out of your advisor, no matter if it’s a hybrid, broker-dealer, insurance agent, RIA that’s a red flag because, again, you should know exactly how much you’re paying for everything that you’re purchasing.
Brent Pasqua: If your advisor says, “The company pays me,” I think that’s just a red flag to run the other way. Would you agree?
Joshua Winterswyk: Absolutely. So, basically, “Or is it free? I don’t really understand it. Elaborate.” If the company’s paying me, you don’t have to pay me, then where’s my interest as the advisor? Because you’re not paying. The consumer’s not paying me. The company’s paying me. So, again, big, big red flag, especially when you have those compensation talks.
Brent Pasqua: Which I think the compensation talk leads into another thing, and that is something that we are. We decided many years ago that the only way to really be a fiduciary advisor, to really do a 100% always, and know that the client knows that 100% it’s in their best interest, is to be a fee-only advisor. Matt, tell us a little bit about what a fee-only advisor is.
Matthew Thiel: Yeah. So, like you said, fee-only is the way to go, we believe. It’s truly the only way you can give that 100% fiduciary advice. And what we mean by that and how that’s possible is you’re paid by the clients. Our clients pay us. And we get paid by nobody else. So, if our clients don’t want to pay us, then we don’t get paid. And you say, “Hey, that sounds really simple.” But unfortunately, the investment industry is far from simple. It’s actually very complex on the fee payment side.
Matthew Thiel: So, fee-only’s this new movement that really was started in the ’90s, but has really picked up steam, I’d say in the last five years or so. We jumped on the train. And the way we get paid is we could get paid by managing our clients’ money in the market, and they pay us for that. Pay it on an hourly basis, kind of like a lawyer would. Or we could do kind of like a project-based, where your CPA with the tax return. A little bit more upfront. You know what the cost is, we do the work, and then we bill you for it.
Brent Pasqua: Yeah. I think one thing that’s also important is you say, “Well, how do your clients pay you?” If we’re managing a client portfolio and we charge 1% a year, if you have more than a million it kind of breaks down and you know some tier breaks. But that fee comes out every quarter. And then the client gets our performance report every quarter with specifically exactly what their fee is. So, they know exactly what their fee was for the quarter. There’s no discrepancy, gray area. There’s no conflict of interest.
Brent Pasqua: And I think one other thing that’s interesting is when we’re doing financial planning, whether we’re recommending the client go get an umbrella policy or a estate plan or a different insurance policy or any recommendation that we give to the client, there’s zero compensation coming back from that recommendation ever. We only get paid for the project or managing a portfolio. We’re not being compensated in any other capacity. Josh, where do you think, and how do you feel about fee-only advisors, as you’ve been one for a long time now, and kind of where this industry has gone?
Joshua Winterswyk: I’m just really think that it’s the only way to get great financial advice. And I truly believe that because when you strip out all of those conflict of interest, and I’m sure there’s good advisors out there of all of these different things we’ve talked about, but to truly have conflict-free advice, given fee-only is the way to go. I mean, it’s transparent. We just talked about it. We understand how we’re compensated. And we work for our client. There is no other conflict. So, I just, I’m a firm believer in it. That’s why I’m here talking about it because I think that if you are hiring an advisor, it is truly important to your financial success to have and to hire a fee-only advisor.
Brent Pasqua: And I think I’ve talked about this in the past, and I haven’t really told the whole story about how we became fee-only and so on. But one day, we’ll talk about that. We’ll maybe tell the story. But the day we figured out really how fee-only advisors work, we literally changed our mindset that day and never looked back. I mean, being fee-only is 100% about making sure the client is taken care of. And it’s so transparent that I really just don’t see any other way that a advisor can be truly fiduciary without being fee-only.
Brent Pasqua: One of the other aspects that are important, as you start to look at who your advisor is currently or if you’re starting to look for another advisor, is to consider certifications. It’s an important aspect. Everyone wants to know what certifications their advisor have. What are the most important ones, Josh? And why are they important?
Joshua Winterswyk: I’ll just start with… I’m a little biased because I have my Certified Financial Planner, or CFP, Certification. But I do believe because this is so specific, if you’re hiring a financial planner to have this certification because the education that goes behind it and the foundation and being fiduciary of taking that oath, of being a CFP, is only going to give you an even better outcome when you’re building a financial plan. So, I think starting with a CFP accreditation is definitely a good start.
Brent Pasqua: Are there any other certifications that people should be looking for?
Joshua Winterswyk: Matt, you got any other ones?
Matthew Thiel: There’s a few other ones. Let’s just focus on the CFP. I think that’s the gold standard in hiring a financial planner right now. And, as a client, you’ve got to ask yourself, would you want to go to a doctor who’s not a doctor? You break your leg. Do you want to go to some random guy who’s on the corner who maybe read a medical textbook, or do you want to go to someone who’s from med school, they’ve passed the MCAT, they’ve passed all their boards, and they’re actually trained to help you? Well, that’s what a CFP is. They’re actually trained to help you in all areas of your financial life. You have to have a college degree. You have to pass the test. You have to go to school, on top of college. If you’re working with an advisor and they’re not a CFP, you should look for a new advisor.
Joshua Winterswyk: Yeah. And the other thing is, is it’s expensive. It’s a commitment towards the career, correct?
Matthew Thiel: Absolutely, yeah. It’s not something you could do in a weekend.
Joshua Winterswyk: And also, I mean, there’s an education requirement to even become a CFP… or excuse me, a experience requirement. So, you can’t just become a CFP with no experience; you also have to have experience as a planner to actually use the certification. So, I think that’s also important.
Joshua Winterswyk: And then it also requires you to continue with continuing education. So, making sure your advisor is always on top of his profession with that requirement of continuing education just makes for, again, a better outcome for the consumer.
Brent Pasqua: So, if you have an advisor right now and you’re a little bit questionable whether or not you’re getting really good advice, or if you’re looking for a new advisor, to come in prepared, what would somebody ask to make sure that they’re asking some really good questions about if the advisor’s good for them or not? Matt, why don’t we start with you?
Matthew Thiel: Well, first off, if you want to do this, if you go to NAPFA… that’s N-A-P-F-A dot-org, I believe. They actually have a lot of these questions on their website. You could click through and look for hiring a advisor, or you can just hand the sheet to the advisor you’re interviewing or your current advisor and have them answer it. I’ve had a couple perspective clients do that to me in the past. I actually kind of liked it; some advisors might not. But the first question that you should ask to the advisor is, “How do you charge for your services?”
Brent Pasqua: Yeah. I mean, if they say that they’re getting paid from the company, I mean, to me, red flag. And I’m not being biased because we’re fee-only. I mean, I just know the way the industry works and I know how products work. And so, it is a big red flag. Josh, what are some other questions?
Joshua Winterswyk: Yeah. Do they have any potential conflict of interest? And you want that disclosed with you. I think that’s very important. And then also asking how they’re regulated. Another really, really good question on there that we have for clients. But a great tip too, to go NAPTA website as well, Matt, for that questionnaire. I think that was a really good tip.
Brent Pasqua: Yeah. And I think also asking about the services that the advisor offers. If the client wants more planning base or if they want more portfolio management, how often you’re going to meet, kind of the reviews. How often are you going to do those reviews, and what you’re going to be expecting once you do those reviews. You want to know what you’re going to get by working with those advisors.
Brent Pasqua: We have very specific systems that we go through when we’re meeting with our clients. We have a meeting agenda. We have a lot that we’re talking about with the client around their goals and their plan and their taxes and their investments and so forth. So, making sure that you’re getting actually what you’re paying for because it seems like there’s a lot of different service types out there, and not everybody’s getting the type of service that they really typically need or want or they should be getting. Any other questions that you guys can think of?
Matthew Thiel: Did we cover certifications? Asking what your certification is? I don’t think we did. So, always ask what their certifications are. There’s a lot of them. CFP’s the gold standard. Make sure they have at least that. There are add-ons you could do to the CFP once you become one. For instance, we’ve been doing the exit planning for business owners. There’s one for private wealth for clients who have 15, 20, 30, 30 million or more. You could go that route. You could go the tax route. But there’s lots of different add-ons you could do to a CFP.
Brent Pasqua: Great, great point. All right. Let’s segment into the last part of the show. Always my favorite. RPA Recommends. Matthew, I’ll start with you. You look like you’re ready to go on this recommend. Tell us what you have.
Matthew Thiel: I have nothing. I have absolutely nothing today. Last time on the show, I hinted I bought a Peloton. So, all my money went towards the Peloton bucket for a while. I’m still waiting for a delivery on my bike.
Matthew Thiel: But I’m a new dad, so I’m going to say to those people who are on the fence about having kids, definitely go for it. It’s awesome. That’s my recommends. If you have kids yourself and they’re newlyweds and you want to be a grandparent, push your kids to have kids. It’s truly awesome, and my recommends for today. And I probably have no good recommends because all we do now is take care of the baby and watch football.
Joshua Winterswyk: That’s a big recommends. Have a baby.
Brent Pasqua: There’s so much I could say about that. I mean, if you didn’t have a recommend, I was going to say that probably needed to be your recommend because I hear you saying that to all your friends who don’t have kids, that they should have a kid. I-
Joshua Winterswyk: I feel like it’s kind of pointed at me, right? He’s kind of saying it like, “Hey, Josh, I’m recommending this to you too.”
Brent Pasqua: Yeah.
Matthew Thiel: There’s a few of our buddies that are still kind of on the fence, and they’re still waiting for the marriage stuff too. So, yeah. They got to do the kids and the marriage as well.
Brent Pasqua: Josh, what do you have for us on the recommend?
Joshua Winterswyk: My recommends. Oh, I know what mine is. This last Saturday, my wife had purchased… It was pretty cool. One of her favorite singers had a virtual concert. I think it was only like 12 bucks. And so, you got an access code to it. And so, our Saturday night was filled around watching this private concert that was put on with you purchasing it. So, really cool.
Joshua Winterswyk: Just kind of recommend if you have a favorite artist. Are you following them or looking that up? I know a lot of these artists are doing that. I thought it was a pretty cool experience through this time to sit down and listen to some live music of your favorite artists at a pretty reasonable cost. I think it was only like 12 bucks. So, that was a pretty cool experience on Saturday night.
Brent Pasqua: That’s pretty neat. I’ll probably have to check that out. My recommend is the FitTrack. It’s actually a scale. It’s a pretty high tech scale. You can download the app to go with the scale. And the scale will tell you a lot of body metrics about your body. My wife had been pushing to get one. She finally got one. We work out. We’ve been obviously eating very different over the last couple years and even more so in quarantine. So, it’s pretty interesting to watch your weight and just some of the metrics every day. If you’re putting yourself on a scale every day, it’s pretty interesting to see. So, I’ve been utilizing that. find it pretty helpful.
Brent Pasqua: When I think the most interesting thing to me is on the weekend, I’ll have one cheat meal, but that cheat meal will take me like three or four days to really lose the extra pounds in my average weight from that one cheat meal. So, it’s pretty interesting. You can start to really track how your body responds to certain foods and the metrics around your body.
Matthew Thiel: Yeah. I should get one of these to go with my Peloton so I could track my progress because I got dad bod right now.
Brent Pasqua: It’ll definitely be helpful and teach you something. So, that’s my recommend. A FitTrack. Check it out. They’re not that expensive, and they’re pretty useful.
Brent Pasqua: So, as we kind of end this thing, any parting thoughts that you have, either of you?
Joshua Winterswyk: No. Think it was good info.
Matthew Thiel: Ask your advisor questions before you hire.
Brent Pasqua: Yeah. We’re advisors. We love helping people, and that’s why we do it. If you would like to schedule an appointment with any of us, just go to our website at rpawealth.wpengine.com. You can schedule a complimentary consultation. We’ll know who’s the favorite on the show as we continue to get more appointments from the show. But we have a little competition on who gets more appointments from the podcast. But you could also download our ebook on our website. If you’d like the show notes, go to Retirement Plan Playbook. But thank you all for listening. Thank you for listening to Retirement Plan Playbook. We’ll see you next time.
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